Banks. Credit Europe Bank N.V. Netherlands Credit Analysis. Rating Rationale. Key Rating Drivers. Profile. 26 January 2010

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1 Netherlands Credit Analysis Ratings Foreign Currency Long Term IDR Short Term IDR BB B Individual Rating D Support Rating 5 Support Rating Floor NF Sovereign Risk Foreign Currency Long Term IDR AAA Local Currency Long Term Rating AAA Outlooks Foreign Currency Long Term IDR Sovereign Foreign Currency Long Term IDR Sovereign Local Currency Financial Data 30 Sep 09* Stable Stable Stable 31 Dec 08 Total assets (USDm) 15, ,276.9 Total assets (EURm) 10, ,540.8 Total equity (EURm) Operating profit (EURm) Net income (EURm) Fitch comprehensive income (EURm) Operating profit/average equity (%) Operating profit/average assets (%) Tier 1 regulatory capital ratio (%) a Unaudited management figures Analysts Janine Dow janine.dow@fitchratings.com Philippe Lamaud philippe.lamaud@fitchratings.com Related Research Applicable Criteria Global Financial Institutions Ratings Criteria (December 2009) Rating Rationale s () ratings are based on its intrinsic financial strength. They reflect the bank s medium size, niche focus and fairly high credit risk as well as management s ability to react quickly to worsening economic conditions in its main operating markets, good liquidity management and stable results during recent turbulent times. Very rapid loan expansion undertaken during slowed dramatically (up just 3% during the nine months to end September 2009) as management made efforts to shore up liquidity and reduce credit exposures to higher risk countries. s loans are concentrated mainly in Romania (29.4%), Turkey (25.2%), Russia (23.4%) and Ukraine (2%), largely to wholesale customers (61% corporate, 33% retail and 6% SMEs). Concentrations by customer group are not very high, but given the still fragile economic outlook for many of the countries in which operates, credit risk remains fairly high. Impaired loans at end September 2009 reached 4.7% of total loans, 75.5% reserved. In addition, 33.5% of s impaired loans are secured by tangible collateral (largely real estate), which provides additional comfort. Retail deposits, attracted through the internet, provide most funding; their maturity has been lengthening and at Q309 around two thirds had contractual maturities in excess of one year. Deposits are not concentrated and have proved highly stable throughout periods of stress. Asset liability management risks are strictly monitored and self imposed liquidity limits are tough, with stress tests envisaging severe shocks. s ultimate shareholder is committed to supporting growth. Around USD100m of subordinated loans provided by the shareholder are planned to be converted to Tier 1 capital in Q110, pending regulatory approvals. Given s risk profile, any weakening of the capital adequacy ratios could lead to negative rating pressure. Support is 98.8% owned by Credit Europe Group (CEG), 100% owned by Fiba Group, a leading Turkish group with significant cash resources and fully owned by Mr Husnu Ozyegin. is strategically important to Fiba Group; Fitch considers the latter s propensity to provide support, if required, to be extremely high. The probability that such support would be forthcoming cannot be relied on, however, as Fiba Group is not rated by Fitch Ratings. Key Rating Drivers Upside potential for s ratings will only arise once the bank has demonstrated its ability to grow substantially and reduce exposures to developing countries. s ratings could suffer a downgrade if the economies where it operates experience material contraction or upheaval, asset quality deteriorates significantly or notable signs of depositor nervousness emerge. Profile, established in 1994 as Finansbank (Holland) N.V. and headquartered in Amsterdam, is regulated by the Dutch authorities. It provides worldwide tailormade trade and commodity finance and retail banking services to around 3 million customers through branches and subsidiaries in the Netherlands, Germany, Belgium, Russia, Romania, Malta, Switzerland, Dubai and Ukraine. 26

2 Niche bank, specialised in trade and commodities finance and committed to retail expansion in selected developing countries Difficult short term prospects, especially in key Russian and Romanian markets, but management quick to expand business in the Turkish market, which it knows well, while decreasing exposures to Russia and Romania Profile is 98.8% controlled by CEG, which in turn is fully owned by Turkey based Fiba Holding AS. The remaining 1.2% stake in is owned by senior management. Fiba Holding AS is the parent company of Fiba Group s financial services investments in Turkey and abroad. At end December 2008 it had assets of USD14.4bn, equity of USD1.56bn and reported net income of USD184m. is by far Fiba Holdings most important investment. Fiba Holdings AS is part of the Fiba Group, founded in 1987 and controlled by Mr Husnu Ozyegin, a prominent banker and businessman. In addition to investments in the financial sector, Fiba Group has investments in retail, real estate, energy, port ownership and management, shipbuilding, and private equity. At end December 2008, Fiba Group, which is not a legal entity but a group of companies controlled by the same shareholder, had total assets of USD17.8bn and equity of USD2.9bn. changed its name to its present form in 2007 following the sale of Finansbank, a medium sized Turkish commercial bank, by Fiba Group to National Bank of Greece. Entities previously controlled by CEG have gradually come under s direct control in order to achieve a simpler ownership structure. represents almost 100% of CEG s assets. has banking subsidiaries in Russia, Romania, Switzerland, Ukraine and Dubai, directly and indirectly held leasing subsidiaries in Russia, Romania and Ukraine, insurance subsidiaries in Russia and Romania and a mortgage subsidiary in Romania. It also has branches in Belgium, Germany and Malta, and representative offices in Istanbul and Shanghai. De Nederlandsche Bank (the Dutch central bank) supervises CEG, (at consolidated and bank levels) and all its operating banking subsidiaries, including carrying out visits to these entities. Like many European banks, has both a supervisory (six members) and a managing board (a CEO plus four members), both of which are accountable to the majority shareholder. All senior management positions on both boards are filled by Turkish nationals well known to Fiba Group, with the exception of the chairman of the supervisory board, who is an independent, experienced Dutch banker. A second independent member is expected to be appointed to the supervisory board by mid The supervisory board is responsible for overseeing all s activities, supervising and controlling all matters relating to risk management, audit, control, financial reporting and prudential regulation. Independent audit and risk committees report to the supervisory board, and corporate governance, nomination, remuneration and compliance oversight committees are in place. Although s shares are not publicly traded, the bank has voluntarily applied many of the best corporate governance practices outlined in the Dutch Corporate Governance Code (Code Tabaksblat). Most members of the managing board have established careers within Fiba Group and are jointly responsible for running the bank. Fiba Group appointees, formerly members of s senior management, head s international subsidiaries. Business is a niche player providing tailor made commodity and trade finance, corporate banking services, and retail banking services in selected emerging markets. It takes deposits largely in EU countries. It employs around 5,100 staff and has 196 branches. Most of its assets and deposits are held in the Netherlands, as illustrated by Table 1 below, which provides details of the relative size of s operations. Loans booked in the Netherlands are almost exclusively to corporate clients and commodities traders. Deposits, however, mostly retail and all internet based, are centralised in Netherlands but also collected in Germany, where the group has a call centre, Belgium and Malta. The Swiss bank services corporate and private banking clients. Banking subsidiaries in Russia and Romania also collect retail deposits. The Dubai subsidiary (paid in capital of USD30m) focuses on providing trade finance to Gulf based corporate clients, services the group s Asian clients and 2

3 may provide some private banking services in the future. The Malta branch acts mainly as a centre for project finance and marine finance loans. Retail activities are focused in the Netherlands, Germany, Belgium, Romania, Russia and Ukraine; retail loans represent around a third of the consolidated loan portfolio. As part of the Finansbank sale agreement, agreed not to compete for new corporate and retail Turkish business until August 2009; this limitation now being lifted, has renewed contacts with Turkish customers well known to management. Any decision to expand into Turkish retail banking will depend on market conditions. Table 1: Details of s Operating Subsidiaries at End September 09 (EURm) Netherlands Russia Romania Ukraine Suisse Dubai CEL (leasing) Russia CEL (leasing) Ukraine Consolidated Total assets 7, , , ,267.4 Customer loans 3, , , ,552.9 Customer deposits 6, ,700.1 No. of employees 611 2,771 1, ,127.0 No. of customers (000) 435 2, ,026.0 No. of branches Uses Uses 196 Russia Ukraine branches branches Source: Strategy intends to grow organically, focusing on markets that offer high growth potential. The pace of expansion will depend on economic conditions and management retains a high degree of flexibility in establishing its growth targets, backed by a supportive shareholder. intends to compete on service and retain depositor loyalty through consistently above average remuneration strategies. Profitable track record, even throughout current crisis Shift into lower risk liquid assets depressing margins Impairment charges rising Performance Although figures are somewhat distorted by the periodic integration of subsidiaries from CEG into the bank (notably the Swiss and Romanian banks in 2007), it is clear that has grown very quickly. High profitability has been supported by wide margins, growing fee income and some more modest foreign exchange related gains. A breakdown of s net income by broad geographic region, in Table 2 below, shows the dominance of contributions made by the Netherlands bank (where most Turkish corporate loans and trade related deals are booked). Table 2: Breakdown of Net Income for the Nine Months to End September 2009 (%) Western Europe (mainly Netherlands) 67 Eastern Europe (mainly Russia) 17 Middle East (mainly Dubai) 16 Total (EURm) 27.7 Source: Due to s focus on commercial and retail banking, net interest income dominates results. Margins, which had been rising, reflecting the growing retail loan book, narrowed sharply during 2009, in line with higher funding volumes and rising funding costs, and management s decision to channel liquidity into safe, but loweryielding, securities. s trade and commodities finance loans are tailor made to suit customer needs and the bank aims to compete on service rather than price. Its reputation in this area is well established, client loyalty is being maintained and margins remain healthy. The highest rate paid on retail term (two year) on line 3

4 deposits during Q409 was 4.25% per year, which is not the highest internet offer available among EU peers. Fee income is largely retail sourced, although letter of credit fees can be quite large, depending on the volume and complexity of such transactions. Other operating income (income statement line 15 on the attached spreadsheet) is mainly composed of FX gains, reflecting rate differences charged by the bank in its retail business (it is common practice, for example in Romania, for loans to be booked in foreign currency but repaid in local currency; as determines the exchange rates used, opportunities to make a spread arise). Overheads are well controlled and staff numbers were reduced by around 20% in 2009; the cost/income ratio for 9M09 reached 49.5%, which is considered sound for a bank with a retail focus and a branch network that has grown very rapidly. Credit impairment charges, as a percentage of pre impairment operating profit, are high (67% during 9M09). This does not offer much of a buffer, especially given the geographical spread of the bank s activities and some customer concentrations. Nevertheless, management has taken steps to reduce credit risks and shift its business mix away from central and eastern Europe and Russia and towards Turkey, which has weathered the current financial and economic crisis fairly well. Prospects is a medium sized bank operating in potentially high risk markets. The shortterm outlook for the development of retail business in Russia, Romania and Ukraine looks very tough, especially in light of rising unemployment, which leads to falling consumer confidence and spending. Fitch believes that a considerable amount of management s time will have to be spent on loan recovery and restructuring. However, business with Turkish customers provides sounder growth opportunities and the bank s expertise in trade is well recognised. s experienced management team and the bank s track record are positive factors. Nevertheless, Fitch considers prospects to be far more testing due to the bank s large credit exposures in developing markets and potential changes in depositor savings patterns due to the continued mistrust and nervousness surrounding the worldwide banking sector. In order to better assess s credit models and customer performance data, Fitch believes these will have to be tested more fully over time and throughout different economic cycles. Fiba Group operates in the same developing countries as, with large investments in shopping centres and real estate. Knowledge of these markets is strong group wide, which helps mitigate some of the risks associated with doing business there. Nevertheless, Fitch considers the geographical spread of s business to be fairly high risk. The management team is experienced in dealing with volatile markets and crises, having been at the head of Finansbank group through very testing periods in Turkey s 2001 banking crisis. This is reassuring. Nevertheless, Fitch believes that, like other niche banks, especially those with emerging market exposures, will continue to face a series of very testing years. Centralised, hands on approach for all aspects of risk management Credit risk high due to geographic concentrations Proven track record of working in volatile environments Risk Management All operating subsidiaries daily management operations are autonomous, but since 2007 s risk management functions have been centralised. Central policies, determined by the managing board, are applicable to all subsidiaries, with control and reporting mechanisms in place at each of these. Policies and procedures are standardised. Limits are approved centrally and each operating subsidiary has a risk manager who reports directly to head office in Amsterdam. IT platforms operate in an integrated manner throughout the international subsidiaries, using CoreFinans software, developed by Finansbank and owned jointly by Fiba Group and Finansbank. 4

5 The Netherlands bank uses a different package, but migration to CoreFinans is scheduled to be completed by Q110. Risk management committees are held monthly, and the asset liability management committee (ALCO) meets weekly, as does the corporate credit risk committee. Policies, guidelines and limits for corporate lending are fairly standardised across the group, adapted to country specific characteristics. Very few of s corporate exposures are externally rated. A 12 category internal rating scale is in place. This forms part of all credit approval systems for corporate customers; data at end Q309 show that 6% of s consolidated loan portfolio was classified within the highestrisk categories according to the internal rating scale. uses the standard approach for credit risk assessment under Basel II but data is being collected with a view to moving towards an internal ratings based approach in the medium term. Limits are established using internal rating categories; in Amsterdam, all approvals for unsecured loans in excess of EUR40m require full approval from the international credit committee. In Russia, approvals are dependent on the outcome of internal rating scores, subject to a EUR4.5m limit for medium risk customers and EUR9m for low risk customers. All approvals in excess of EUR9m require input from head office. Retail lending approvals are decentralised. Each subsidiary operates using its own score cards, adapted to reflect the local environment. Credit bureau checks are systematic. All retail approvals in excess of EUR50,000 require a credit committee. Counterparty risk analysis and limits are conducted centrally. At end September 2009, the loan portfolio was broken down as shown in Table 3. Table 3: Breakdown of Loan Portfolio at End September 2009 (%) Corporate customers 59.4 Private banking clients 1.0 Leasing 3.1 SME customers 4.0 Retail consumer 20.4 Residential mortgages 12.1 Total Source: A further breakdown of the corporate customer book shows working capital loans at 50.2%, marine finance at 12.4%, project finance at 16.9%, syndicated loans at 6.4%, longer term transactional lending at 9.8%, leasing at 2.7% and others at 1.6%. Table 4: Total Exposure by Country September 2009 Country (%) Romania 19.0 Turkey 18.5 Russia 17.7 Germany 12.1 Netherlands 11.0 Ukraine 1.7 UK 3.6 Malta 2.1 USA 2.3 Switzerland 1.7 Other 10.3 Total Source: A breakdown of on and off balance sheet credit risks by geographical spread shows a high concentration of risks in emerging economies, as detailed in Table 4. 5

6 The sectoral breakdown of credit risk (excluding bank placements) shows some concentrations on increasingly risky categories, notably: iron and steel (13.1%); construction (9.3%); shipping (12.7%); commercial real estate (11.7%; of which Russia 26.7% and Romania 56.8%); and tourism (7.3%). Total real estate exposure at end September 2009 reached 18.3% of consolidated loans, split 59.1% retail (dominated by Romanian mortgages, with average LTV at 62.7%) and 40.9% commercial (average LTV 54.7%), the latter split among offices (14.2%), hotels (10.6%), industrial and warehouses (6.2%), land and non residential (7.4%), shopping malls (12.3%) and residential development (49.3%).) The top 15 customer exposures at end September 2009 were equivalent to 12.8% of total loans. Due to s size, its largest exposures often reach maximum prudential limits, but internal limits mean that the top 10 names cannot exceed 20% of total corporate portfolio exposures, and single sector limits are established at 15%. More than half of the bank s loans mature within one year, as expected given the high concentration of trade and working capital deals. Mortgage and other retail loans are much longer term; loans maturing over five years represent 23.6% of total loans. By currency, 79.7% of customer loans are denominated in US dollars, euros or Swiss francs, with Russian rouble and Romanian lei loans accounting for most of the rest. Romanian retail borrowers practice of borrowing in foreign currencies, while earning in local currencies, means they are exposed to devaluation risks. Impaired lending within the Romanian retail portfolios is high (around 6.6%). Secured lending (cash collateralised) represented around 4% of total on and offbalance sheet exposure at end June 2009; other collateral backed a further 45% of loans but, excluding mortgage loans, some forms of collateral may offer little comfort (eg, motor vehicles). Exposures to Dubai arise from indirect lending to a Turkish contractor operating in that country, and are insignificant in relation to the bank s consolidated equity. Related party exposure accounts for a modest 1.6% of total loans. Loan Loss Experience and Reserves At end September 2009, impaired loans (90 days overdue), reached 4.7% of total lending. These are almost all concentrated in the retail portfolio; loss experience in the trade finance book has been minimal and within the corporate books impairments appear well contained. The top 20 impaired loans were equivalent to 19.7% of the total impaired portfolio; the largest impaired loan, to a marine finance client, was 1.3% of equity at end September 2009 but is 61% reserved. Restructured loans were equivalent to 6.8% of loans at end October 2009, which is rather high. Securities Portfolio has no exposure to structured or leveraged products. Derivatives are largely used for hedging currency risk. The securities portfolio is mainly used for liquidity management. At end September 2009, the bank s securities book was broken down as follows: 55.4% sovereign and 44.6% private sector. Securities eligible for rediscounting with the European Central Bank (ECB) reached 63.5% of the total securities book. The split of securities is 71% trading, 17% held to maturity and the balance available for sale (AFS). has a small proprietary trading portfolio of EUR495m, dominated by bank bonds. Write downs on the AFS securities reached EUR4.8m during 9M09. Market Risk The group ALCO, which reports to the chief financial officer and the managing board, receives regular information from the ALCO committees at all its operating subsidiary banks. Interest rate sensitivity and maturity gaps are closely monitored; asset and liability mismatches in differing currencies and maturity buckets must be hedged if they exceed 15% of equity. A 200bp change in interest rates must not 6

7 erode equity by more than 5%. VaR (value at risk) in the trading book is limited to EUR13m for a 10 day holding period or 2% of equity, and the average VaR hovers around 1.2% of equity. Operational Risk calculates its capital charge for operational risk under Basel II using the basic indicator approach. Statistics are being compiled with a view to moving towards the more sophisticated measures in the medium term. Statistics collected to date indicate the highest incidences of fraud in the Russian and Romanian subsidiaries, but values concerned are small due to the highly fragmented nature of the business in these two countries. Retail deposits stable during crisis Despite stability, on line deposits not core in Fitch s view Tough liquidity limits imposed by management Supportive shareholder ready to convert subordinated debt into Tier 1 capital and inject fresh equity if required Funding and Liquidity Management figures show that 75% of deposits are sourced from retail clients; the group s reliance on the interbank and wholesale funding markets is not significant. looks at funding on a group basis, although the ultimate target is that each subsidiary should be self sufficient in its funding requirements. This is not the case for the Romanian and Russian subsidiaries, which rely on funding from the parent. However, the Russian subsidiary s intercompany funding from the parent significantly decreased from EUR479m in H109 to EUR148m at end October Retail deposits are sourced mainly in Germany (49%) and the Netherlands (32%). Deposits are not concentrated, with the 20 largest depositors representing a low 2.03% of total customer funding at end September Related party funding accounts for 3% of customer funding. Securities eligible for rediscount at the ECB total around EUR1.5bn; at Q309 pledged securities reached EUR600m. Subordinated debt issues, subscribed by the shareholder, have final maturities extending to plans to convert USD100m into Tier 1 capital by end Q110. Bonds maturing in H110 total around EUR200m. The bank raised two year syndicated loans of EUR100m and USD125m in July 2008; as expansion is not being scaled back, securing additional medium term funding is not considered a priority. is entitled to participate in the measures announced by Dutch authorities to restore stability in the financial system. However, the bank has not made use of any such facilities. Preserving liquidity has been a major focus for management since mid 2008 and efforts to build up immediately liquid assets (cash, bank placements and repoable securities) have been considerable. Deposit stability has been a continuous focus; by end 2009, management s selfimposed objective of holding sufficient immediate liquidity to repay 40% of customer deposits overnight had been achieved. According to s limits, wholesale funding must not exceed 40% of total funding; the top 10 depositors cannot exceed 10% of total customer funding; the consolidated cumulative maturity mismatches must be positive for six months (even after assuming that 50% of savings deposits will be lost overnight). Average deposit values are low and all NV s retail deposits are covered by the Dutch depositor guarantee scheme (up to a maximum of EUR100,000); this guarantee has been extended by the Dutch government to end deliberately discouraged more volatile corporate deposits, lowering rates paid for deposits above EUR100,000. Maturities of deposits have been extended; two thirds of deposits matured in more than one year and deposits with maturities over two years represent around 35% of total retail deposits. There are no maturity gaps on cumulative basis. Although deposits are now longer term, there is nothing to ensure that depositors would not break the terms of their deposits under extreme stress scenarios. However, this is the case for most banks around the world, and s deposits proved stable during 2008 and

8 Capital s shareholder approves and supports its growth plans, injecting fresh capital as required (2007: EUR65m; H108: EUR75m and a further EUR25m of Tier II instruments provided in October 2008). The conversion of subordinated debt by Q110 has already been referred to in Funding and Liquidity above. s policy is not to pay dividends to CEG (only minimal amounts to service debt at CEG). Double leverage is not an issue for the group because debt issued by CEG is minimal (USD32m) and is not used to capitalise subsidiaries. Due to s risk profile, any decline in the bank s capital adequacy ratios could lead to negative rating pressure. 8

9 Income Statement 30 Sep Dec Dec Dec Months 3rd Q uarte r 9 Months 3rd Quarter As % of Year End As % o f Year End As % of Year End As % o f USDm EURm Earning EURm Earning EURm Earning EURm Earning Original Original Assets Original Assets Original Assets Original Assets 1. Interest Income on Loans O ther Interest Income Divid end Incom e Gross Inte rest and Dividend Income 1, , Interest Expen se on Custome r De posits P referred Dividends Paid & Declared O ther Interest E xpense Total Interest Expense Net Inte rest Income Net Gains (Losses) on Trading and Derivatives Net Gains (Losses) on Other Securities Net Gains (Losses) on Asse ts at FV through Incom e Statement n.a. n.a. n.a. n.a. n.a. 13. Net Insurance Income Net Fees and Com missions Other Operating Income Total Non Interest Ope rating Inco me Personnel Expenses Other Operating Exp enses Total Non Interest Expenses Equity accounted Profit/ Loss Operating Pre Impairment Operating Pro fit Loan Impairment Charge Securities and Other Credit Impairment Charges Operating Profit Equity accounted Profit/ Loss Non operating Non recurring Income Non recurring Expense Change in Fair Value of Own Debt Other Non operating Incom e and Expenses Pre tax Profit Tax expense Profit/Loss from Discontinued O perations Net Income Change in Value of AFS Investments Revaluation of Fixed Assets Currency Translation Difference s Rem ainin g OCI Gains/( losses) Fitch Comprehensive Income Memo: Profit Allocation to Non controlling Interests Memo: Net Income after Allocation to Non controlling Interests Memo: Dividends Relating to the Period Exchange rate USD1 = EUR USD1 = EU R USD1 = EUR USD1 = EUR

10 Balance Sheet 30 Sep Dec Dec Dec Months 3rd Quarter 9 Months 3rd Quarter As % of Year End As % of Year End As % of Year End As % of USDm EURm Assets EURm Assets EURm Assets EURm Assets Original Original Original Original Original Original Original Original Original Assets A. Loans 1. Residential Mortgage Loans n.a. n.a. n.a. 2. Other Mortgage Loans n.a. n.a. n.a. 3. Other Consumer/ Retail Loans 1, , , Corporate & Commercial Loans 5, , , , , Other Loans Less: Reserves for Impaired Loans/ NPLs Net Loans 8, , , , , Gross Loans 8, , , , , Memo: Impaired Loans included above n.a. 10. Memo: Loans at Fair Value included above n.a. n.a. n.a. n.a. n.a. B. Other Earning Assets 1. Loans and Advances to Banks , , Trading Securities and at FV through Income 2, , Derivatives Available for Sale Securities Held to Maturity Securities n.a. n.a. 6. At equity Investments in Associates Other Securities Total Securities 4, , , Memo: Government Securities included Above 1, , Investments in Property Insurance Assets Other Earning Assets Total Earning Assets 13, , , , , C. Non Earning Assets 1. Cash and Due From Banks 1, , , Memo: Mandatory Reserves included above n.a. n.a. n.a. n.a. n.a. 3. Foreclosed Real Estate Fixed Assets Goodwill Other Intangibles Current Tax Assets Deferred Tax Assets Discontinued Operations Other Assets Total Assets 15, , , , , Liabilities and Equity D. Interest Bearing Liabilities 1. Customer Deposits Current , Customer Deposits Savings 3, , , , Customer Deposits Term 7, , , , , Total Customer Deposits 11, , , , , Deposits from Banks 1, , , Other Deposits and Short term Borrowings Total Deposits, Money Market and Short term Funding 13, , , , , Senior Debt Maturing after 1 Year Subordinated Borrowing Other Funding Total Long Term Funding Derivatives Trading Liabilities Total Funding 13, , , , , E. Non Interest Bearing Liabilities 1. Fair Value Portion of Debt n.a. n.a. n.a. n.a. n.a. 2. Credit impairment reserves Reserves for Pensions and Other Current Tax Liabilities Deferred Tax Liabilities Other Deferred Liabilities Discontinued Operations Insurance Liabilities Other Liabilities Total Liabilities 14, , , , , F. Hybrid Capital 1. Pref. Shares and Hybrid Capital accounted for as Debt Pref. Shares and Hybrid Capital accounted for as Equity G. Equity 1. Common Equity 1, Non controlling Interest Securities Revaluation Reserves Foreign Exchange Revaluation Reserves n.a. n.a. n.a. 5. Fixed Asset Revaluations and Other Accumulated OCI Total Equity Total Liabilities and Equity 15, , , , , Memo: Fitch Core Capital Memo: Fitch Eligible Capital Exchange rate USD1 = EUR USD1 = EUR USD1 = EUR USD1 = EUR

11 Summary Analytics 30 Sep Dec Dec Dec Months 3rd Quarter Year End Year End Year End % % % % Original Original Original Original A. Interest Ratios 1. Interest Income on Loans/ Average Gross Loans Interest Expense on Customer Deposits/ Average Customer Deposits Interest Income/ Average Earning Assets Interest Expense/ Average Interest bearing Liabilities Net Interest Income/ Average Earning Assets Net Int. Inc Less Loan Impairment Charges/ Av. Earning Assets B. Other Operating Profitability Ratios 1. Non Interest Incom e/ Gross Revenues Non Interest Expense/ Gross Revenues Non Interest Expense/ Average Assets Pre impairment Op. Profit/ Average Equity Pre impairment Op. Profit/ Average Total Assets Loans and securities impairment charges/ Pre impairment Op. Profit Operating Profit/ Average Equity Operating Profit/ Average Total Assets Taxes/ Pre tax Profit C. Other Profitability Ratios 1. Net Income/ Average Total Equity Net Income/ Average Total Assets Fitch Comprehensive Income/ Average Total Equity Fitch Comprehensive Income/ Average Total Assets Net Income/ Av. Total Assets plus Av. Managed Assets 0.60 n.a. n.a. n.a. D. Capitalization 1. Fitch Eligible Capital/ Regulatory Weighted Risks Tangible Com mon Equity/ Tangible Assets Tangible Com mon Equity/ Total Business Volume Tier 1 Regulatory Capital Ratio Total Regulatory Capital Ratio Fitch Eligible Capital/ Tier 1 Regulatory Capital n.a Equity/ Total Assets Cash Dividends Paid & Declared/ Net Income Cash Dividend Paid & Declared/ Fitch Comprehensive Income Net Income Cash Dividends/ Total Equity E. Loan Quality 1. Growth of Total Assets Growth of Gross Loans Impaired Loans(NPLs)/ Gross Loans n.a. 4. Reserves for Impaired Loans/ Gross loans Reserves for Impaired Loans/ Im paired Loans n.a. 6. Impaired Loans less Reserves for Im p Loans/ Equity Loan Impairm ent Charges/ Average Gross Loans Net Charge offs/ Average Gross Loans n.a. n.a Impaired Loans + Foreclosed Assets/ Gross Loans + Foreclosed Assets n.a. F. Funding 1. Loans/ Customer Deposits Interbank Assets/ Interbank Liabilities

12 Reference Data 30 Sep Dec Dec Dec Months 3rd Quarter 9 Months 3rd Quarter As % of Year End As % of Year End As % of Year End As % of USDm EURm Assets EURm Assets EURm Assets EURm Assets Original Original Original Original Original Original Original Original Original A. Off Balance Sheet Items 1. Managed Securitized Assets Reported Off Balance Sheet n.a. n.a. n.a. 2. Other off balance sheet exposure to securitizations n.a. n.a. n.a. 3. Guarantees Acceptances and documentary credits reported off balance sheet n.a. n.a Committed Credit Lines Other Contingent Liabilities Total Business Volume 16, , , , , Memo: Total Weighted Risks n.a. n.a. 7, , , B. Average Balance Sheet Average Loans 8, , , , , Average Earning Assets 12, , , , , Average Assets 14, , , , , Average Managed Assets (OBS) n.a. n.a. n.a. Average Interest Bearing Liabilities 13, , , , , Average Common equity 1, Average Equity Average Customer Deposits 11, , , , , C. Maturities Asset Maturities: n.a. n.a. n.a. n.a. n.a. Loans & Advances < 3 months n.a. n.a. 1, n.a. n.a. Loans & Advances 3 12 Months n.a. n.a. 1, n.a. n.a. Loans and Advances 1 5 Years n.a. n.a. 3, n.a. n.a. Loans & Advances > 5 years n.a. n.a. n.a. n.a. n.a. Debt Securities < 3 Months n.a. n.a n.a. n.a. Debt Securities 3 12 Months n.a. n.a n.a. n.a. Debt Securities 1 5 Years n.a. n.a n.a. n.a. Debt Securities > 5 Years n.a. n.a. n.a. n.a. n.a. Interbank < 3 Months n.a. n.a n.a. n.a. Interbank 3 12 Months n.a. n.a n.a. n.a. Interbank 1 5 Years n.a. n.a n.a. n.a. Interbank > 5 Years n.a. n.a. n.a. n.a. n.a. Liabiliity Maturities: Retail Deposits < 3 months n.a. n.a. 2, n.a. n.a. Retail Deposits 3 12 Months n.a. n.a. 3, n.a. n.a. Retail Deposits 1 5 Years n.a. n.a. 1, n.a. n.a. Retail Deposits > 5 Years n.a. n.a. n.a. n.a. n.a. Other Deposits < 3 Months n.a. n.a. n.a. n.a. n.a. Other Deposits 3 12 Months n.a. n.a. n.a. n.a. n.a. Other Deposits 1 5 Years n.a. n.a. n.a. n.a. n.a. Other Deposits > 5 Years n.a. n.a. n.a. n.a. n.a. Interbank < 3 Months n.a. n.a n.a. n.a. Interbank 3 12 Months n.a. n.a n.a. n.a. Interbank 1 5 Years n.a. n.a n.a. n.a. Interbank > 5 Years n.a. n.a. n.a. n.a. n.a. Senior debt Maturing < 1 year n.a. n.a. n.a. n.a. n.a. Senior debt Maturing > 1 year n.a. n.a n.a. n.a. Total Senior Debt on Balance Sheet Fair Value Portion of Senior Debt n.a. n.a. n.a. n.a. n.a. Subordinated Debt maturing < 1 year n.a. n.a n.a. n.a. Subordinated Debt maturing > 1 year n.a. n.a n.a. n.a. Total Subordinated Debt on Balance Sheet Fair Value Portion of Subordinated Debt n.a. n.a. n.a. n.a. n.a. D. Net Income Reconciliation 1. Net Income Add: Preferred Stock Dividend Published Net Income n.a. n.a. n.a. n.a. n.a. E. Equity Reconciliation 1. Equity Add: Pref. Shares and Hybrid Capital accounted for as Equity Published Equity n.a. n.a. n.a. n.a. n.a. Exchange Rate USD1 = EUR USD1 = EUR USD1 = EUR USD1 = EUR

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